Cycle Trading

The volatility continues ,,,

Stocks had a convincing rally on Friday, closing up over 9% and forming a swing low. Then stocks dropped on Monday. Stocks broke below Friday’s low, negating Friday’s swing low to close down close to 12% on Monday. Picking a bottom is like trying to catch a falling knife. One could wait for a swing low and a break above the declining trend line for a buy signal. Or wait for a weekly swing low.

This is week 24 for the intermediate equity cycle. Stocks are in their timing band for an intermediate cycle low. So it is likely that once the daily cycle low forms, it will signal a new intermediate cycle. So one could wait on weekly swing low. Since stocks have printed a lower weekly low this week, the earliest a weekly swing low can form would be next week.